Technology plays an ever-increasing importance in society. However, the ability for third parties to invest in technology, for intellectual property (IP) users to pay fair royalties for use of the technology and IP owners to receive fair compensation for use of their technology remains limited.
An investor today who identifies a specific technology that he or she believes is promising and is worth investing in, is left with only a few choices. If the technology is owned by a public company then the investor may buy stock in that public company. However, the performance of that stock may not be affected solely by that sole technology; as the company may be involved in many different technology areas and the stock performance may be affected by many other factors. If an investor is interested in technology owned by a private company, then the investor must make a direct investment with that private company. Again, the investment in the entire company may be affected by many other factors; as such a company may market other products and technologies, other than the sole technology that the investor is interested in focusing on.
With respect to companies who want to use technology and obtain licenses for technology that is patented by a third party or covered by another's trade secret, the avenues for obtaining proper licenses are limited. Basically the company must negotiate a license with the technology owner. In such circumstances the technology owner generally has the upper-hand as it can refuse to set royalty rates that the purchasing party may feel are reasonable. Such an uneven playing field causes companies to ignore patents or steer away from such license negotiations. In fact, licensing rarely occurs voluntarily by the company that makes use of the technology. It is more likely that the patent owner or technology owner must confront the company and accuse it of infringement before any license is negotiated. In many circumstances litigation occurs prior to the execution of a license.
Litigation is often an undesirable process and does not always lead to a just outcome for either party. Even where a judge or jury may determine what is a so-called “reasonable royalty,” the parties are rarely satisfied with the outcome. Corporations are being threatened with patent infringement lawsuits at an increasing rate. At such a juncture the corporation has two options: 1) take a license at the rate demanded by the patent owner, or 2) go forward with litigation costing multi-million dollars. Neither of these options are practical or desirable.
Finally, the patent and technology owners who believe that their technology is being exploited by others, without proper compensation, face enormous risks in litigating via patent infringement lawsuits. With the unpredictability of the litigation process and the enormous costs in attorneys' fees reaching nearly $2 million per patent infringement lawsuit it is only the rare patent that can be asserted. As well, due to the enormous expenses in litigation costs the patent owner only may be able to pursue a single infringer at a time through litigation. And only if and when that litigation ends successfully, with an award or settlement including lump sum payments or on-going royalties, can the patent owner move on to the next infringer.
Therefore, the current marketplace for licensing patents and other technology has many inefficiencies and disadvantages for all parties involved. Therefore, there is desired a new marketplace for patents and other technology which allows for greater distribution of technology and provides a means of establishing reasonable compensation for the technology owners.